Concentrations of credit risk

6 Months Ended

Apr. 30, 2017

Note 8 - Concentrations of credit risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. At April 30, 2017, the Company had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $3.1 million.

Two customers accounted for approximately 15% and 14% of the Company’s net sales for the six-month period ended April 30, 2017. Of the two customers, one accounted for approximately 15% of the Company’s net sales for the six-month period ended April 30, 2016. The same customers accounted for approximately 16% and 17% of the Company’s net sales for the three months ended April 30, 2017 and one customer accounted for approximately 15% of the Company’s net sales for the three months ended April 30, 2016. At April 30, 2017, these customers’ accounts receivable balance accounted for approximately 16% and 24% of the total net accounts receivable balance. At October 31, 2016, one of the customer’s accounts receivable balance accounted for approximately 20% of the Company’s total net accounts receivable balances. Although these customers have been ongoing major customers of the Company, the written agreements with these customers do not have any minimum purchase obligations and the customers could stop buying the Company’s products at any time and for any reason. A reduction, delay or cancellation of orders from these customers or the loss of these customers could significantly reduce the Company’s future revenues and profits.